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Wage Growth, Landholding and Mechanization in Agriculture Evidence from Indonesia

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  • Yamauchi, Futoshi

Abstract

This paper examines dynamic patterns of land use, capital investments and wages in agriculture using farm panel data from Indonesia. The empirical analysis shows that with an increase in real wages that prevailed in both agricultural and non-agricultural sectors in rural areas, relatively larger farmers increased the size of operational farm land by renting in land. An increase in real wages has induced the substitution of labor by machines among relatively large farmers. Machines and land are complementary and, consistently, the inverse land-productivity relationship is reversed among relatively large holders.

Suggested Citation

  • Yamauchi, Futoshi, 2015. "Wage Growth, Landholding and Mechanization in Agriculture Evidence from Indonesia," 2015 Conference, August 9-14, 2015, Milan, Italy 212723, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae15:212723
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    File URL: http://ageconsearch.umn.edu/record/212723/files/Wagegrowth_Land_Machine_Indonesia_June2015.pdf
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    References listed on IDEAS

    as
    1. Keijiro Otsuka & Yanyan Liu & Futoshi Yamauchi, 2013. "Factor Endowments, Wage Growth, and Changing Food Self-Sufficiency: Evidence from Country-Level Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1252-1258.
    2. Dwayne Benjamin & Loren Brandt, 2002. "Property rights, labour markets, and efficiency in a transition economy: the case of rural China," Canadian Journal of Economics, Canadian Economics Association, vol. 35(4), pages 689-716, November.
    3. Yamauchi, Futoshi, 2014. "Wage growth, landholding, and mechanization in agriculture : evidence from Indonesia," Policy Research Working Paper Series 6789, The World Bank.
    4. Wang, Xiaobing & Yamauchi, Futoshi & Otsuka, Keijiro & Huang, Jikun, 2016. "Wage Growth, Landholding, and Mechanization in Chinese Agriculture," World Development, Elsevier, vol. 86(C), pages 30-45.
    5. Keijiro Otsuka, 2013. "Food insecurity, income inequality, and the changing comparative advantage in world agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 44(s1), pages 7-18, November.
    6. Fumio Hayashi & Edward C. Prescott, 2008. "The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 573-632, August.
    7. Foster, Andrew D. & Rosenzweig, Mark R., 2010. "Is There Surplus Labor in Rural India?," Working Papers 85, Yale University, Department of Economics.
    8. Futoshi Yamauchi, 2012. "Prenatal Seasonality, Child Growth, and Schooling Investments: Evidence from Rural Indonesia," Journal of Development Studies, Taylor & Francis Journals, vol. 48(9), pages 1323-1341, September.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Yamauchi, Futoshi, 2014. "Wage growth, landholding, and mechanization in agriculture : evidence from Indonesia," Policy Research Working Paper Series 6789, The World Bank.
    2. Martin, William J. & Fukase, Emiko, 2014. "Who Will Feed China in the 21st Century? Income," 2014: Food, Resources and Conflict, December 7-9, 2014. San Diego, California 197164, International Agricultural Trade Research Consortium.

    More about this item

    Keywords

    Agribusiness; Land Economics/Use; Research and Development/Tech Change/Emerging Technologies;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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